US Juggles Jobs and Democracy In Pressing Beijing

WASHINGTON
— AS the Clinton administration struggles with what may be its most vexing foreign-policy decision - whether to continue most-favored-nation (MFN) trading status to China - it is wedged in a conflict between United States economic interests and American democratic values.

Washington's failure to force Beijing to end its abuse of political prisoners or cease its efforts to jam Voice of America radio has frustrated US policymakers who view diplomacy as an opportunity to push for democratic change in Communist China. They see MFN as a tool to prod an otherwise recalcitrant Beijing.

But to American business leaders eyeing markets there, this analysis is out of focus. China is the world's most populous country; over the next decade, its people will spend between $500 billion and $1 trillion on imported goods and services. (The stakes for the US economy, Page 9.)

By revoking MFN, Washington would slap tariffs on Chinese imports and deal a strong blow to bilateral trade just at a time when recession in Europe and market penetration problems in Japan make the Chinese outlet more attractive for US exporters.

But US business leaders complain that they are constrained by the State Department's push for trade sanctions, while European and Japanese competitors, whose governments see trade sanctions as acts of folly, win lucrative contracts.

Mr. Garten was in the Chinese capital this month lobbying on behalf of American firms now vying for assorted projects. A State Department official was also in Beijing at the same time threatening to revoke MFN if China failed to make marked improvements in human rights.

An exasperated US Secretary of State Warren Christopher called it ``a mixed message.''

Upon his return from Asia last week, Garten told industry leaders and reporters: ``One of the means of influencing a country on a broad range of issues is in trade ... expanded trade advances human rights.'' But, he added, ``Nothing's going to move unless there is overall significant progress on human rights.''

That realization is particularly tough for the commerce undersecretary, who has been spearheading a campaign to engage the US private sector in rapidly growing economies that hold the most promise for US exports and investments.

China is the largest of the so-called emerging markets, and Garten is marshaling federal agencies to help provide US firms with needed financing and access into these new frontiers. By his measure, China's burgeoning commercial arena could be the world's ``largest economy in the early 21st century.

``The kind of competition we're facing in the international arena dwarfs anything that we're doing [on behalf of American companies],'' Garten says. ``We won't amount to much unless we make a big push'' for emerging markets, such as China, he adds.

The Clinton administration continues to work toward that end. The US-China Joint Commission on Commerce and Trade, a group that has been dormant since the 1989 Tiananmen Square government massacre and crackdown on political demonstrators, will meet as scheduled next month in Washington. Commerce Secretary Ron Brown and Chinese Trade Minister Wu Yi, who co-chair the committee, will be hard pressed to boost commercial ties in the current climate.

``A full trading relationship with countries affords the United States a lot more leverage,'' says Barry Rogstad, president of the American Business Conference, a Washington-based interest group representing 100 of the nation's fastest-growing mid-sized firms. While ABC companies have a ``tremendous interest in China,'' Mr. Rogstad says ``it takes a lot of time to build commercial relationships.'' After investing time, money, and strategic planning in markets such as China, he quickly adds, ``we don't want an outside force coming in and putting a chasm in the bridge we're trying to build.''

Ever since Clinton hailed Pacific trading and investment partners as the most important allies for America's economic future, Washington has been embroiled in disputes with the region's biggest players, including Japan, Malaysia, and China.

``We better watch upsetting them,'' says Rogstad. ``We want to be sure that we don't force them into each others' arms. That's not a great way to start the 21st century.''

Both US and Chinese officials seem to believe that economic realities will determine political outcomes. In Washington, top State Department brass stress that closer commercial ties with China and a higher standard of living there will create ripe conditions for market forces and greater freedom and eventual democratizaton. In Beijing, party officials have watched for years as US policymakers stepped down from the high moral ground on human rights in favor of MFN and enhanced trade in China.

Trade-watchers and Sino experts are anxious about this year's annual review of MFN for China because the stakes are bigger than ever.

``It is not a hopeless situation in the next couple of months,'' Assistant Secretary of State for Asian Affairs Winston Lord told skeptical legislators last week. ``Hard work remains to be done.''